Research from the Centre for Economics and Business Research (“CEBR”) suggests that by 2015 London will have been toppled from being the world’s largest financial centre (as measured by jobs) into third place. It will have been overtaken by New York and Hong Kong. The authors of the report gave three reasons for this decline:
- short-sighted over-regulation
- penal taxation
- banker bashing
In another damning conclusion the lobby group The City UK suggested that half of decisions concerning relocation are going against Britain.
By 2015 the CEBR calculates that London financial jobs will have declined from 280,000 in 2011 to 237,000 in 2015.
The new business minister Michael Fallon has, however, his mind on other matters. He is thinking “small first”. He is recruiting two entrepreneurs who will start work early in 2013. Their role will be to “really know what works for business”. They will road test all small business policies and schemes. Quite what the Business Secretary Vince Cable and his Department for Business, Innovation & Skills (“BIS”) has been doing for the last two years we can only speculate about. Why ‘The Breedon Report’ (‘Boosting Finance Options for Business’) has failed, at great expense, to identify some or all of the answers the entrepreneurs will be seeking, is perplexing.
Mr. Fallon’s plans include a £1.1 million entrepreneurs and education programme which will work with academics at 100 universities and a £2.9 million enterprise research centre.
The Government Minister is also trying to raise awareness of the SEED/EIS scheme which enables new or up to two year old companies (with assets of less than £200,000) to raise, once only, £150,000 in early stage equity finance. Investors receive 50% income tax relief and up to 28% capital gains tax relief (for one year only) tax free dividends and share gains.
The scheme has flopped so far but Mr. Fallon thinks that is because not enough people know about it. The people who have knowledge of the scheme are compliance officers in brokerage firms who say that under Financial Services Authority (Financial Conduct Authority) risk assessment tests the companies do not qualify for acceptance. IFAs are also rejecting the SEED/EIS as too risky.
One of the reasons Britain is losing its place in the world’s rankings is because of over-regulation. Last week Andrew Tyrie, the chairman of the Parliamentary Commission on Banking Standards said he was looking into ‘excessive regulation’.
With respect to Mr. Fallon I don’t think he needs to spend millions on his schemes to discover what everybody else knows.